Friday, July 21, 2006

Individual Alaskans Weigh In On Oil Taxes Via Rep. Bob Lynn's Constituent Poll

We've heard from the lawmakers, the candidates, and the media's talking heads on petroleum profit taxes and the proposed Alaska natural gas pipeline. However, we've heard very little organized feedback from ordinary Alaskans.

State Representative Bob Lynn (R-South Anchorage) decided to change that. Rep. Lynn (pictured at left, courtesy of mailed a seven-question House District 31 survey on currently proposed changes to the oil tax and the governor’s proposed gas pipeline contract to 6,985 (Republican, Democrat, Independent) constituents who voted in the 2004 primary election. As of July 16th, 255 constituents (approximately 3.65% of the total) responded to the survey. Click here to see the original press release posted on Rep. Lynn's legislator blog, which he updates at least twice weekly as one of many ways he keeps constituents informed.

In his press release, Representative Lynn stated, “I wasn’t elected to represent the administration or the oil producers – unless they live in District 31. The survey is important because it expands the input from my constituents. The better

the communication, the better the representation.
” He continued, “Oil tax and gas pipeline issues are still evolving. Survey results alone won’t determine my vote on critical issues, but I think the survey provides helpful guidance for whatever compromises may be necessary.”

Question 1: What tax should be placed on net oil profits?

Less than 20%: 11.37%
20.0% (governor’s proposal):18.96%
22.5% (House proposal): 26.07%
25%: 21.80%
More than 25%: 21.80%

My comment: A strong indication that the state legislature has a better grasp of public sentiment than the governor.

Question 2: Should “progressivity” be applied to the oil tax?

Yes: 75.8 %
No: 24.2 %

My comment: A strong indication that the people believe the producers are capable of paying a higher amount. This sentiment is undoubtedly fueled not only by the unprecedented windfall profits earned by the producers, but their willingness at times to squander a portion of it on gargantuan golden parachutes for retiring executives.

Question 3: Should there be a “floor” on any oil tax?

Yes: 74.56%
No: 25.44%

Question 4: Should the oil and gas taxes be locked in for 30 and 45 years?

Yes: 25.86%
No: 74.14%

My comment: This is the most controversial part of the proposal. Lawmakers, pundits, and the general public alike are opposed to such a long tax freeze; only the producers and the governor favor this. Indeed, the state Senate already passed their own version.

Question 5: Should any decisions on oil taxes and the gas pipeline be delayed until we know who the next governor is?

Yes: 42.86%
No: 57.14%

My comment: It appears a significant number of respondents may be looking at Frank Murkowski's poll numbers, and are worried that the legislature might be tempted to stall because they feel Murkowski is a lame duck, and that they might get a better deal from his successor. The message to the lawmakers is simple - press on regardless.

Question 6: Do you agree with the governor and the oil producers that the “All Alaska” gas pipeline is not economically feasible?

Yes: 55.78%
No: 44.22%

My comment: This is a conservative district - the "Yes" trend probably reflects Dan Fagan's influence. The conservative talk-show host has turned into a full-blown cheerleader for the producers. Fagan refuses to consider any possibility of merit to the all-Alaska LNG proposal.

Question 7: Should the legislature make necessary and prudent compromises on the oil taxes proposals and gas pipeline contract and move forward now?

Yes: 50.46%
No: 49.54%

My comment: A virtual 50-50 split. This may reflect the idea that respondents ultimately expect the legislature to make more compromises, but think it's time for the producers to make some compromises of their own in response to the legislative compromises already made. For example, what looked like a dead-certain petroleum profits tax a month ago may yet morph into a revised gross production tax combined with the end of the Economic Limiting Factor (ELF), as Democratic proponents of a production tax are increasingly joined by Republicans.

In addition to the survey questions, space was provided for individual comments. A very large number of comments came back with the surveys and are in the process of being recorded. Many of the comments were very strongly worded (suspect Rep. Lynn's hard at work deleting the "expletives".

Analysis: Despite District 31 being a conservative-to-moderate district, respondents to this survey want a more progressive oil tax and do not like the proposed long-term tax freeze. You can images what the numbers might look like in Les Gara's district.

This means the producers must make further compromises. They must accept a shorter tax freeze period, 10 years for oil, 20 years for gas, to take effect only after construction starts. They must also reconcile themselves to paying a profit or production tax more commensurate with their ability to pay. They must also explicitly assure that Alaska will get its fair share of gas for its needs. And finally, they must commit themselves to a flexible planning timeline (years, not months or days). The producers ask us to express too much faith in them. Faith-based religion is O.K.; faith-based natural gas is not O.K.

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